As Bermuda continues to ease restrictions relating to the COVID-19 pandemic, and additional sectors of the economy are opening with Phase 4, The Minister of Finance Curtis L. Dickinson provides a further update on the Ministry of Finance COVID-19 - Fiscal Plan.
The update covered four areas: an update on the Unemployment Benefit, Contributory Pensions Temporary Amendment Act 2020, information on the process for taking advantage of the National Pension Scheme suspensions, and payroll tax relief for restaurants and bars.
The term of the unemployment benefits has been extended for an additional 4 weeks, for a total of 16 weeks.
Last week, the Ministry of Finance authorized unemployment benefit payments to 6,420 people for a total of $5,518,000. We now have paid benefits to over 10,100 for a total cost of approximately $43 million.
We expect further payments to continue on a bi-weekly schedule, which means another payment on Friday, July 10.
As mentioned earlier, we continue to make progress to resolve problem applications, and last week we paid 332 applicants for the first time.
Approximately 4,500 people have notified the Department of Workforce Development that they have returned to work, and they are no longer receiving unemployment benefits. Our expectation is that this number will continue to grow as Bermuda enters its second week of Phase Four and government continues to actively explore and implement actions to get our people back to work.
All individuals and companies must notify the Government of your return to work to confirm your eligibility period.
Please visit www.bermudajobboard.com, follow the link at the top for COVID-19 Unemployment Application, then the link at the top for the Back to Work form.
For those that have already done so, we thank you for the act of responsible citizenship.
For those who have returned to work and have NOT informed us, I want to make one point very clear: if this government determines that individuals and employers are not informing the government in a timely manner of their return to work, causing the government to “overpay” individuals, this government will utilize all of its powers outlined in the Regulations to claw back funds that have been paid to individuals that are no longer eligible for unemployment benefits. As we continue to work together as a community, to restart and rebuild our economy, it should be viewed as unacceptable and irresponsible for individuals that are back to work, and no longer eligible to accept unemployment benefits.
Contributory Pensions Temporary Amendment Act 2020
The Contributory Pensions Temporary Amendment Act 2020 came into force on July 1st. As previously announced this amendment allows for employees, employers, and self-employed persons to suspend payment of their social insurance contributions for the whole of the suspension period (July 1st 2020 – June 30th 2021). Guidelines, FAQs and forms for both employees and employers are located at www.gov.bm. For any questions please contact the Department of Social Insurance at SIsuspend@gov.bm or call their hotline for any suspension related queries at 444-2470.
The National Pension Scheme (Occupational Pensions) Temporary Amendment Act 2020 also came into force yesterday. This amendment allows for a suspension of employee and employer contributions for a twelve month period commencing 1st July, 2020 and ending on 30th June, 2021. The process to take advantage of this concession is as follows:
Once the employee and employer agree on the employee suspension, the employer should write to the plan administrator advising them of the suspension of contributions. The employer may agree with the employee suspension, but still wish to make their contributions. They may do so and the employer must advise their plan administrator accordingly. The reporting to the plan administrator is necessary so that the employer is not reported by the administrator to the Pension Commission as being delinquent. An employer’s continued contributions are not treated as voluntary and as such they are not subject to payroll tax.
If the plan is a defined benefit plan, then the employer does not have to receive the agreement of the employee to make the suspension. This is because the employer is financially responsible for making up any pension shortfalls that may result from suspending the contributions.
Latest Refund Statistics
The latest stats for refunds under the NPS:
Total Applications Received: 6,976
Total Number Approved: 4,382
Total Value of Applications Approved: $49,443,629
Total Applications Received: 97
Total Number Approved: 79
Total Value of Applications Approved: $2,482,284
It is pleasing to know the recent hardship withdrawal provisions under the Act has assisted many families over the last few weeks and clearly validates the benefits of this social policy initiative. I can also advised that legislation will be tabled tomorrow which will make additional amendments to the Act and respective regulations to increase the scope of coverage and provide additional access to plan members and former members of defined contribution pension plans as follows:
- by removing the requirement for a member not to be retired for those seeking a $12,000 refund;
- by removing the requirement for persons to be retired for those seeking a 25% refund;
- by removing the requirement for persons to be retired for those seeking a small pensions refund; and
Payroll Tax Relief to Restaurants and Bars
On May 21st 2020 Government announced short-term relief from payroll tax to assist the restaurant and bar sector. During the last quarter ending 30th June 2020, payroll tax was set at a zero rate for the restaurant and barsectors and these businesses ceased deducting payroll tax from employees during this period. I am pleased to advise that this concession has been extended for the next quarter and the Government is considering extending this concession further to include restaurants within hotels that are operating under thegeneral hotel licensing regime.